IMF Study: Bitcoin's Role in Cross-Border Transactions Grows
A new study by the International Monetary Fund (IMF) explores the role of Bitcoin in cross-border transactions. The 43-page paper, 'A Primer on Bitcoin Cross-Border Flows: Measurement and Drivers', discovers that Bitcoin serves as a remittance tool for migrant workers and a way to bypass capital controls, especially in countries with low traditional capital flows.
The IMF report employs three methods to quantify cross-border Bitcoin payments: on-chain data, Chainalysis data, and LocalBitcoins data. It reveals that countries like Argentina, Venezuela, Ukraine, Georgia, Belarus, Nigeria, Kenya, and Colombia have a high share of incoming Bitcoin flows relative to their GDP. Notably, Bitcoin flows are most prominent where other capital flows are low, suggesting it complements rather than replaces existing financial systems.
The study also finds that Bitcoin acts as a hedge against risk. Bitcoin flows increase when the dollar is strong and risk aversion is high, indicating that people turn to Bitcoin in times of economic uncertainty. The IMF, now acknowledging Bitcoin's significance, has published this comprehensive analysis, signaling a shift in its stance towards cryptocurrencies.
The IMF's 'A Primer on Bitcoin Cross-Border Flows: Measurement and Drivers' emphasizes Bitcoin's growing role in global finance. It highlights Bitcoin's use as a remittance tool and a risk hedge, particularly in countries with low traditional capital flows. As Bitcoin's relevance increases, so too does the need for thorough research and understanding of its impacts on international financial systems.
